Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Friday, May 18, 2007

SEC Obtains Emergency Relief in Bogus Real Estate Development Fraud

On May 18, 2007 the Securities and Exchange Commission filed an emergency action against Felix Strashnov, a/k/a Felix Straton, and Michael Ayngorn, and three entities they controlled to halt an ongoing fraud in which the defendants claim to have raised nearly $2 million. The defendants used high pressure sales tactics and cold-calling to sell unregistered securities of bogus real estate development companies, to unsuspecting investors, including elderly people with limited means.

The Commission's complaint, filed in the Southern District of New York, charges the defendants with making fraudulent solicitations, conducting an unregistered offering, and misappropriating investor funds. The complaint also alleges that the defendants made numerous misrepresentations about the assets, operations and future prospects of the companies.  Rather than using funds raised from investors to purchase and develop investment properties for resale, Straton and Ayngorn purchased personal residences, held in their own names rather than in Empire's name. Empire appears to have no properties, assets, or revenue other than funds raised from investors. Empire has taken no steps to conduct an initial registered public offering of its securities.

http://lawprofessors.typepad.com/securities/2007/05/sec_obtains_eme.html

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